I recently read an article on Bloomberg about the downfall of Sweden’s cradle-to-grave welfare system. It made me think about what I would do if I was in Sweden, and it dawned on me I had considered the same question a few years ago while living through the political protests in Thailand. Only this time I found the answer – FIRE (Financially Independent / Retire Early). The best way to protect yourself if your country falls apart is to be financially independent.
How Far Has Sweden Fallen?
Previously one of the best countries in the world, Sweden is now struggling to provide basic services. Rightfully, Swedes no longer trust their social welfare system to take care of them into old age.
After digging deeper, I was shocked to find rapes have risen almost 1,500%. Sweden is now the rape capital of the West. Gang violence and other crime are soaring. Some areas are so dangerous the police won’t go into them. It’s not safe for women to go out at night. Their education system is in crisis. Terror groups use welfare money to finance attacks. Waiting times for operations have tripled and their health care system is in shambles. Youth unemployment is among the highest in Europe. Job security is scarce.
The Swedish welfare system was a model for the rest of the world in the 1970’s. Their economy grew rapidly from 1950 to 1975 as it benefited from the worldwide economic boom after World War II. Its factories and supply lines survived the war so it was able to export steel and other materials to rebuild worn-torn countries. This made Sweden the richest country in Europe in the 1950’s and allowed it to fund its first-rate welfare system. During the 1980’s, over 85% of workers were unionized. Life was good all around.
Things started changing in the 1990’s. Labor laws became much more restrictive. Short-sighted politicians slashed public spending. Deregulation of the financial sector led to a property bubble, a banking crisis, and mass unemployment. Pension reform led to lower benefits.
Although the cracks in the welfare system were never repaired, the government let in over 600,000 immigrants from 2012 to 2017. Sweden has historically welcomed people in need, but regardless of your view on immigration, there is a limit to how many people a small country can welcome in a short time. With a population of only 10 million, it’s easy to see why social services are stretched. High levels of service are now difficult to maintain even with a marginal tax rate of 60%.
Integrating hundreds of thousands of immigrants from a completely different culture is no easy task. The government and media try to cover up the worst stories, such as sex attacks on women by migrants at music festivals, but the truth still gets out on social media.
Given the decline in quality of life, it’s not surprising a political party with Neo-nazi roots now gets 25% of the vote in some areas.
Other Countries That Are Falling Apart
It’s surprisingly common for countries to fall apart economically or politically. Venezuela is the first one that comes to mind. Food shortages are so severe that 75% of Venezuelans lost weight last year, with the average person losing over 12kg (26 lbs)! Medicine is in short supply and crime is rampant. Believe it or not, commuters are shot at random and their motorcycles stolen for spare parts. Looting and hoarding are common and young men often join gangs to fight for food. Inflation is close to 500%!
Another country in crisis is Argentina. Previously a thriving nation that doubled its economy between 2002 and 2011, Argentina is now experiencing a currency and economic crisis. Their currency dropped 18% in just 12 days in May 2018. Yearly inflation is 25%. Police strikes and power blackouts are regular occurrences and interest rates are the highest in the world at 40%. The government has asked the International Monetary Fund for a bailout to help stop the bleeding, and we all know what usually happens when the IMF gets involved.
There’s a long list of other countries currently in crisis or struggling to recover. Syria, Iraq, Libya, North Korea, South Sudan, Somalia, Sierra Leone, Central African Republic, Spain, Greece, Bolivia, Uzbekistan, South Africa, Egypt, Ukraine, Austria, Russia, and Peru are just the tip of the iceberg. The UK, Belgium, and Spain have strong secessionist movements and, according to some people, are teetering on the brink of collapse. Imagine long-standing Western countries falling apart during your lifetime.
What About Thailand?
Thailand has definitely seen its share of problems over the past few decades. The Asian economic crisis of the late 1990’s, widespread flooding in 2011, and regular political protests are some of the most well-known. What you may not know is civil war was a real possibility a few years ago. Many expats were planning their escape, just in case.
In fact, Hollywood released a movie in 2015 about Thailand falling apart called No Escape, starring Owen Wilson and Pierce Brosnan. I wouldn’t recommend anyone waste two hours of their life watching it, but it paints a dramatic picture of the worst case scenario where Thai people hunt and kill foreigners. Hopefully, that would never happen, but if you were in Bangkok when the army cleared the streets with live ammunition, it doesn’t take a large stretch of the imagination to picture foreigners as targets.
Protesters shut down central Bangkok for months. Unknown assailants launched RPG’s at the Skytrain. Fights and bombs were common throughout the city. Military guards stood outside my office building. Succession was on everyone’s mind and no one knew what the end-game would be.
Fortunately, Thailand has been calm since the last military coup in 2014, but there is no guarantee how much longer it will last with elections around the corner.
How to Protect Yourself
Obviously, it is easier to change countries if you have money. Even if you have a passport that doesn’t provide visa-free travel to many places, immigrating to another country is a lot more probable if you have lots of cash. If you are lucky enough to have a Western passport, you can go to almost any country in the world, at least temporarily.
One of the biggest retirement risks for people in Western countries is relying on government or corporate pensions. The quickest path to financial self-destruction is not saving during decades of work. Pension cutbacks are common and some large corporate pensions have even gone bankrupt. US social security needs to be overhauled but it is political suicide for politicians to tackle the problem. One thing is for sure though – pension under-funding is going to be an even bigger problem in the future. Working 30-40 years and then enjoying a 30-year publicly funded retirement is not realistic.
A large part of FIRE is being debt-free. Surviving an economic crisis is a lot more likely if you don’t have high monthly debt payments. I can’t imagine having a job I hate, living through a recession, and worrying about losing my home at the same time.
Rejecting consumerism is almost always necessary to FIRE. If you are already comfortable not having the latest brand names and don’t need to shop regularly for a dopamine hit, you won’t need to adjust your spending very much in a crisis. Many people on the path to FIRE regularly save over 50% of their salary. At that savings rate, you could take a 50% cut in pay without adjusting your lifestyle. If you live in a country that has high taxes, you need to try extra hard to live below your means and save.
I’m not saying you need to become a doomsday prepper. But if Sweden can fall apart and put basic services, pensions, and public safety at risk, everyone needs FIRE to protect themselves. It is prudent to have your own investments no matter what country you live in.